The only payroll taxes that will appear on the income statement are the ones that the employers must pay: the employers’ matching portion of the Social Security and Medicare taxes (FICA) and the federal and state unemployment taxes. (The payroll taxes withheld from employees’ wages and salaries are not [...] Continue Reading…

This phrase is used in cost accounting and involves the assigning, applying, or allocating of fixed manufacturing overhead costs to the units produced by a manufacturer.

Three examples of fixed manufacturing overhead costs include 1) depreciation of the manufacturing equipment, 2) the property tax on the factory building, and 3) [...] Continue Reading…

Generally, the amount of a corporation’s retained earnings is the cumulative net income since the corporation began minus all of the dividends that the corporation has declared since it began. The amounts are recorded in the Retained Earnings account, which is reported in the Stockholders’ Equity section of the [...] Continue Reading…

The average will be more representative as you consider more daily balances in the computation. For example, if you compute the average balance for the year 2006 by using the balances from two days (December 31, 2005 and December 31, 2006), you are ignoring the balances on the other [...] Continue Reading…

The monetary unit assumption is that in the long run, the dollar is stable—it does not lose its purchasing power. This assumption allows the accountant to add the cost of a parcel of land purchased in 2006 to the cost of land purchased in 1956. For example, if a [...] Continue Reading…